Prime Minister Narendra Modi’s claim that several States, including Telangana, did not agree to the Central government’s request to reduce value added tax (VAT) on petroleum products for some reason or the other has triggered yet another war of words between the State government and the BJP-led Centre.
The Prime Minister went ahead to say that seven States, including Telangana, are seen to have pocketed around ₹12,000 crore between November and March last fiscal, with Telangana accounting for around ₹1,450 crore of it.
Adding fuel to the fire was a tweet by Union Minister Hardeep Singh Puri who pointed out the “curious” case of Telangana. The State imposes one of the highest VAT on petrol and diesel – 35.2% on petrol and 27% on diesel. “The State government has collected ₹56,020 crore as VAT from 2014 to 2021. Projected to mop up ₹13,315 crore in 2021-22. Adds up to a huge ₹69,334 crore. Where has it gone?” the Union Minister tweeted.
Industries Minister K.T. Rama Rao was quick to react, claiming that fuel prices shot up because of the NPA (non-performing alliance) Central government. “Name-calling States for not reducing VAT even though we never increased it; is this the cooperative federalism you’re talking about Narendra Modiji,” he asked.
Mr. Rama Rao asserted that the State had not increased VAT on fuel prices since 2014 and rounded it off only once. The State was not getting 41% of its rightful share because of the cess imposed by the Centre. “In the form of cess you are looting 11.4% from the State and we are getting only 29.6% for FY23,” he tweeted. The Industries Minister suggested that the Centre scrap the cess so that petrol could be supplied at ₹70 a litre and diesel at ₹60 all over the country. “One nation – One price?” he added.
Senior officials said the State government issued orders making price adjustment in 2015 wherein VAT on petrol was 31% plus ₹2 per litre and on diesel 22.25% plus ₹2 per litre. The government, in the same year, revised VAT in petrol from 31% to 35.2% and it was enhanced to 27% from 22.25% on a litre of diesel. The ₹2 additional levy per litre was absorbed as part of the revised rates.
An official said that Mr. Hardeep Puri was correct in his claim over the percentage of VAT levied on petrol and diesel. And the figures quoted by the Union Minister pertaining to the revenue generated over the past seven years were also right. “It’s correct with minor variations. That’s all,” the official said when asked about the Union Minister’s tweet.
Officials, however, said the revenue generated was being spent on the effective implementation of a spree of welfare and developmental programmes launched in the interests of the common man.
“Taxes are collected and money is spent accordingly,” he said. The official saw the present imbroglio between the Centre and the State as a “purely political fight”. “The Centre could have collected almost ₹20 lakh crore through frequent hikes in petrol prices. Where has all this money gone?” he asked.
